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tv   Studio 1.0  Bloomberg  January 25, 2015 12:30pm-1:01pm EST

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>> he has been called tech's boy genius, a nonconformist, perhaps the only ceo who has refused to keep a schedule. david karp started tumblr before he was 20. he sold it to to yahoo! for about $1 billion before he was 30. it is now one of the most creative and social blogging platforms, all from a guy who dropped out of high school, lives in a loft, and drives a vespa. joining me today on "studio 1.0," tumblr founder and ceo david karp. thank you for joining us. thank you for having this on the schedule. >> i do have a schedule now. >> now you are part of yahoo!, you have meetings. >> we had meetings before yahoo! this has turned into a major
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team of 300 people. a pretty major business that we launched a year and a half ago. >> tell me about you, where you grew up. tell me about your parents. >> i was born and raised in new york city. my mom was a teacher. she started in the music industry. my dad was a composer. did a lot of work for television, particularly in news. i found myself surrounded by all of this creative technology growing up. in my dad's recording studio. my mom's work in the recording industry. i remember spending those nights and weekends in the recording studio. it felt like the starship enterprise. >> when did you learn how to code? >> i learned markup languages when i was 11 years old. to start making stuff for the internet. when i was 13 years old or 14 years old, i started to get proficient in perl, php, a little bit of c, just enough to do a little damage. one of the first things that drew me into it were these personal identities people were creating for themselves. i saw the aol profiles and away
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messages. i saw that in the websites people were building. i really loved that expression, that identity. the idea this could be a place to create something that represented you. >> you dropped out of high school when you were how old? >> after my freshman year, when i was 15. >> you were homeschooled. >> computer science education in high school, at least in new york city, 14 years ago when i was in school really did not exist. it just didn't back then, it just wasn't in high schools. now it is there in a huge way. kids are learning to code in grade school. i always insist that you stick around. if you have that stuff at your disposal, hang out and spend
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time with teachers who are proficient and can help you get started. that is something i did not have. >> i spoke to many founders who dropped out and made a lot of money. they have founded amazing companies, and they don't recommend anybody do what they did. >> if i had access to a computer science education when i was in high school, i would have stuck around. if you can find it there, stick around. get it there. >> you went to tokyo by yourself when you were 17. why? >> i had my heart broken and needed to get out of here. i bought a ticket and moved to the other side of the planet. i was really excited about tokyo, because i thought it was a future city, a place with remarkable technology and engineers. i love japan. i love tokyo. i ultimately came back to new york with a sense of american entrepreneurialism. >> you started tumblr in 2006. tell me how it began.
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>> it was something i had been cooking for a couple of years. i was really noodling on it for a while. coming out of, frankly, selfish desires i had for something that did not exist at the time. >> what were you trying to create? >> it was 2005, 2006, and the creative capabilities of the web had vaulted forward. video on youtube was possible. video was one of the hardest things to do on the internet, and all of a sudden, youtube unlocked it. >> it was the beginning of facebook. the heyday of myspace. >> facebook making it really easy to share. twitter making it easy to publish. my frustration through all of this was as much as the technology was marching forward the actual services people were building were more and more restrictive. facebook was giving you a lot more publishing capability but
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always on the same vanilla white profile page everybody else had. you were forced to use the diaspora of tools. you put your photos on flickr. put your short updates and links on twitter, put your articles on wordpress or movable type. your videos on youtube. you ended up with all these different channels and your expression sort of broken up across all these different networks. >> how did you decide to turn it into a business? >> it decided for itself. we had a couple of weeks between contracts, at my consulting company. we were sitting on our hands, waiting for the next gig to get started. i said, let's just go for it. i feel like we can hack together the basic features. the basic features were the ability to post anything. tumblr was one of the first platforms that let you post a single photo, a set of photos, a link. a quote, a video you just recorded and edited. it could all go to one place, one blog that was yours. the ability to customize everything, which was also pretty novel at the time. >> elon musk has said starting a company is like staring into the abyss of death. i have heard other entrepreneurs say it's like swallowing shattered glass.
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here you are, 20 years old. did you have any of those moments along the way, where it is scary, it is hard? >> of course. it was horrifying. there have been some, plenty of absolutely stomach turning moments. plenty of nights without sleep. moments where you feel like you totally screwed everything up. it is all over. you get pretty used to those moments. you get through them, at least in my role. you get through them knowing the team needs you to be an optimist, to be positive. to see through to the end of it. even when you can't really see, you need to be the one to paint the path forward, show the team how we are going to keep going. the big moment for us, a public one, was a few years in when we started to get some popularity or traction. all of the sudden, the site started going down. we could not keep up with the scale or the growth we were seeing. the embarrassing thing for me and the team was, we thought we
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were really clever. we thought we had figured this out and we would scale this to infinity. little did we know what we did not know. we found ourselves underwater and all of a sudden, the site is going down. we are developing a reputation for the site going down. the worst and most stomach turning part in all of this is that we had these brilliant creators, people using tumblr to do remarkable things. using it as their home, for their incredible work. every time we screw up, we are taking their stuff off of the internet and out of the world. that was just, we thought, so unforgivable, so terrible. it was crushing for me and the team to be screwing up in that way. it was exacerbated by the fact that we had not built out the big, robust engineering team we needed at the time to get through to the other side. >> you started as a teenager. you go through these highs and lows. how did you develop your own personality and style as a leader? how hard was that? >> i've been really lucky to have some great investors and mentors from early on.
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i've had great partners with me to steer me to what i should have been doing with my time. for every moment in tumblr's history. the way the team has this works has changed hugely over the last 10 years. the people on the team have changed as well. >> tell me about selling to yahoo! did you want to sell or did you feel like you had to? ♪ >> tell me about selling to yahoo! how did you make that decision,
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how did the process start? how did you start talking to marissa? >> the conversation with marissa
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>> tell me about selling to yahoo! how did you make that decision, how did the process start? how did you start talking to marissa? >> the conversation with marissa was a fun one. we were looking for partners for strategic investment. we were in the process of raising money. more than just having an investor come in and cut us a check. actually show up with some technology we can lean on. resources, distribution, content that could make our network better. there were a ton of things to do with yahoo! but also, with marissa -- her vision for what she was trying to do with the company was really aligned with what we were doing with tumblr. where we were going next and what we would need.
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the other thing was, in marissa and in her team we were spending time with, we found an unstoppable positivity and optimism which we had come to appreciate. it is not universal across this industry. there are plenty of people with brash personalities and occasionally an intense negativity. i've always and i think our team has always been pretty allergic to that. >> did you want to sell, or did you feel like you had to sell? >> we weren't trying to sell the company. we needed to raise some money. just for profitability. the conversation with marissa was, by far and away, one of the most exciting conversations we had been having at the time. it quickly escalated from cutting us a check and finding ways to partner together to let's make this official. we want to do all of it. that was something big to chew on. those were an emotional couple of weeks. it was an incredible offer and
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opportunity. a real promise she was making. a year into this thing, something i can say she has lived up to. >> what is the relationship now? tumblr is technically a separate company. you are still ceo. >> we are a wholly owned subsidiary. we have our own leadership team. i am ceo. we have our own head of hr, sales, finance, all of that. >> what is it like having a boss? >> not all that different than having a board. i feel like you always answer to somebody. as soon as it is official, the board says goodbye. they send you nice notes, congratulate you, but they basically say goodbye. they are not your board anymore.
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>> it is worse than going off to college. [laughter] >> it is terrifying. these guys who had been partners, mentors of mine on the team, hugely involved. some of them for like seven years. you are now all of the sudden parting ways. that was a really jarring moment. we are incredibly lucky that we have amazing support and an amazing mentor in marissa. that was a big shift. >> what does marissa want from you and tumblr? >> the thing that got her so excited, what got us so excited, she saw the path that we were on. >> what have you been able to do with yahoo! that you wouldn't have been able to do without? >> the big one came about six months in. we launched tumblr ad products powered by yahoo! ad tech. that was a really big deal. all of a sudden, we could go to
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the market with really, really robust ad technology. with this incredibly expressive canvas we had been working on for the last seven years. those two things together were a pretty monster combination for this ad industry. that suddenly gets to benefit from the work we had been doing. and all of the real ad tech that yahoo! had been putting together. >> one of your investors recently talked about companies -- at some point, they need to turn into a real business. they need to focus on monetization and profits. he said, tumblr had to be sold even though they had potential. tumblr's annual burn rate was almost 50% of the entire fund. three exclamation points. how do you respond to that? >> we were making money. it is true we had a real burn rate. we would have been able to -- the options in front of us were raised what you would call a growth round, get somebody to cut you a big check. or go and find and acquire, take on the burn rate. until you cross over to profitability. >> what about user growth? give me some numbers in terms of
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where tumblr is today. how many blogs, how many countries? >> at the time of the acquisition, we were 100 million blogs. we crossed over 200 million blogs. we reach an audience now up almost 450 million people all over the world. >> you had 47.3 million monthly unique users in august. in may, it was 39 million. it looks like it has dipped. how do we make sense of that? >> we use them for our advertisers. they like to use it for comparative demographics. it is pretty far off our actual audience numbers, which are closer to a global audience of 400 million people. they do not directly measure any of our mobile traffic. it is very hard to get the full picture of it. >> marissa mayer's acquisition strategy has been criticized and tumblr is the biggest acquisition she has made so far. critics said, tumblr was not making money or growing that fast. how do you respond? >> we were and are growing very fast. if she wanted to buy a profitable company at the time of acquisition, there were and are still plenty of them. she saw a path forward and something she thought could be not just a big business, but a business with a lot of alignments with yahoo! we are about to have a lot to brag about. >> what is tumblr's ad strategy? within yahoo!, what is the strategy for growing the business now you are within this bigger company? >> we have a novel ad platform. it's all about wide-open creative expression. trying to get the most creative parts of the industry, to give them a space, a digital space where they can tell those same stories. where they can inspire us to
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become customers of these brands. get us to aspire to drive the beamer. or drink the coke. yahoo! is building more and more content on top of tumblr. there are digital magazines you have heard of, yahoo! food, yahoo! tech and travel, those are built on tumblr. we launched the ability to take that advertising we're developing for the tumblr network, where you come to get the reach demographics and engagement of the tumblr network. you take that same content and roll it out to the full reach of the yahoo! network. >> i want to ask you about the "competition." i know there is not necessarily direct publication. what do you think of what they are doing? >> they have done a lot of things that nobody else is doing. at the same time, they are kind of on the other side of a fight we have been fighting for a long time. giving people more identity. letting people create something that is theirs. one of the things that drives me bonkers about medium is they strip all the identity away. they try to make it a commoditized network. with lots of long articles from various people rather than a place where i can set up and have my blog. my space, my place on the internet. but they are doing cool stuff with longform text. vine is doing novel stuff with video. >> what about facebook? and twitter? do you consider them competition? >> we are all kind of vying for
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attention, but it is different. we have found our spot in the big internet. in this big ecosystem right now. the stuff you go to see on facebook and twitter is created by people you know or celebrities you wish you knew. it is about people. tumblr on the other hand is a little bit more like your tv. it's not about people you know, it is about the stuff you love. >> buzzfeed? >> it is cool. jonah is brilliant. they are making great stuff, using tumblr to make great stuff. i was they would run it on top of tumblr. >> there has never been a $10 billion tech company coming out of new york. why not? ♪ >> how is your life different now that you have sold your company for $1 billion? you're still just not even 30 years old. what do you like to do when you want to act your age? >> when it's not tumblr, it is like 3-d printing or drones or 3-d design. 3-d printing is one of the most interesting, new, creative technologies. creative technology is the thing that always gets me really energized. >> what have you printed in 3-d? >> i am working on a chess set. >> really? >> a host of things from mechanical design that a chump
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like me can start to figure out because the software is so good, so accessible. you can watch a five minute youtube tutorial. you can do some damage in 3-d design software. >> you are doing a bit of tech investing in new york. >> a tiny bit. mostly just in my friends' companies. >> just for fun? >> just to support my friends who are doing this stuff. >> there has never been a $10 billion tech company coming out of new york. why not? when there are several in silicon valley.
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>> how is your life different now that you have sold your company for $1 billion? you're still just not even 30 years old. what do you like to do when you want to act your age? >> when it's not tumblr, it is like 3-d printing or drones or 3-d design. 3-d printing is one of the most interesting, new, creative technologies. creative technology is the thing that always gets me really energized. >> what have you printed in 3-d? >> i am working on a chess set. >> really? >> a host of things from mechanical design that a chump like me can start to figure out because the software is so good, so accessible. you can watch a five minute youtube tutorial. you can do some damage in 3-d design software. >> you are doing a bit of tech investing in new york. >> a tiny bit. mostly just in my friends' companies. >> just for fun? >> just to support my friends who are doing this stuff. >> there has never been a $10 billion tech company coming out
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of new york. why not? when there are several in silicon valley. >> i think there will be. i think it is just a numbers game. there are a lot more startups, tech companies coming out of the west coast right now. we have some great ones but not nearly in the same numbers as the west coast. that's something we are working on. there is no shortage of ambition in new york. >> what about talent and money? can you get the best talent? can you get the most funded? >> i think so. at tumblr, we did a great job of recruiting. we get a lot of talent from the west coast. new york happens to be a much better city than san francisco. >> you don't want to go there. >> for all the things that are challenges, they only make us more hungry. we have plenty to prove, but i think we will do that. >> how optimistic are you about yahoo!'s future? >> i'm excited to be a big part of it. i believe in marissa. i think she has built an extraordinary team. i'm excited about a lot of stuff they are doing on their own.
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and a lot of the stuff we are doing with them. i am hopeful and excited to be a shareholder. >> you do not think you will ever start another company? >> tumblr was something i really wanted but that didn't exist yet. it was never about doing the tech startup. or being a founder or ceo. >> net neutrality is important to you and tumblr. you have a position on it. what is your position? >> that it is important. we should do it right. and not set up laws or rules that set up the next generation of companies for people with ideas to have to worry about or even worse spend time in courts or in meetings with a handful of carriers that run the world. >> david karp, founder and ceo of tumblr. thank you for joining us. >> thank you. this was fun. ♪
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>> it is the best of bloomberg television at davos 2015. i am tom keene. for the next hour, we will be giving you the highlights of some of the inside conversations our specialwith guests we have had at the world economic forum. let's go inside. >> here we are with larry summers again. there is so much to talk about. let's begin with this. particularly here in this country, the memory of last week's swiss franc fiasco is still pretty fresh. what happens if mario draghi disappoints? >> it won't be good. ma